Nepal: Nepal Rastra Bank (NRB) wrote to Reserve Bank of India (RBI) asking it to make Indian currency notes of denominations higher than Rs 100 legal in the country. Nepal has requested the Indian government to make new Indian currency of Rs 200, Rs 500 and Rs 2,000 legal in Nepal.
The NRB has asked RBI to issue a notification under the Foreign Exchange Management Act (FEMA) and to provide the exchange facilities to get bills of such denominations. The country’s central bank said all banks, financial institutions and NRB, hold Indian currency denominations of Rs 500 and Rs 1,000 worth Rs 48 million.
However, the actual stock of banned Indian currency is expected to be much more because people in Nepal were earlier allowed to carry Rs 500 and Rs 1,000 Indian bank notes worth up to Rs 25,000. Also, those residing in areas bordering India usually stash Indian notes of larger denominations as they have to go to Indian markets frequently to buy goods.
For the uninitiated, the RBI has only allowed the circulation of Indian currency notes of Rs 100 and less in Nepal and provides exchange facilities for bills of this denomination.
The RBI did not issue the notification for the newly circulated bank notes thus making their use illegal in Nepal. Bhisma Raj Dhungana, chief of Foreign Exchange Management Department at the NRB said, “As the RBI was not allowing the circulation of the higher denomination Indian notes, we had to ban their use in Nepal to protect our citizens.”
“However, after we received complaints from people in various sectors, especially those who have to visit India frequently, we asked the Indian central bank to make such bank notes legal tender in Nepal,” said Dhungana.
The NRB has prepared software to keep a database of names of people who sought an exchange facility, a serial number of bills, and their identification numbers, among others.